Paisa 36 per kwh increase allowed: KE's 45.2 paisa increase in head of fuel charges adjustment rejected

National Electric Power Regulatory Authority (NEPRA) rejected K-Electric's request for an increase of 45.2 paisa per unit in terms of fuel charges adjustment (FCA) for June 2016. However, it approved a raise of 36 paisa per kilowatt hours (/Kwh) for the power utility under the same head.
The NEPRA's decision, a copy of which available with the Business Recorder stated: "The approved amount shall be applicable to all the consumer categories except lifeline consumers of the KE. The said adjustment shall be shown separately in the consumer bills of September, 2016 on the basis of units billed for the month of June, 2016." It may be recalled here that K-Electric had submitted its FCA request with the regulatory body in July last. In this connection, a hearing was held at NEPRA Tower, Islamabad on August 18 last.
During the hearing, K-Electric submitted that in its own generation, the claimed variation of 45 paisa per unit was due to the increase in per unit weighted average fuel cost of generation in Bin Qasim Power Station-I ("BQPS-I") from Rs 5.446/kWh in reference month of March, 2016 to Rs 7.059/kWh in June, 2016. Aforesaid variation in per unit fuel price occurred due to rise in weighted average price of furnace oil from Rs 19,376/ metric ton in March last to Rs 27,658/ metric ton in current month.
According to a notification dated April 28 by Oil and Gas Regulatory Authority, gas price also soared from Rs 600/MMBTu to Rs 613/MMBTu; applicable from April 01 onwards.
That increase in gas price also contributed to an increased fuel price variation not only in BQPS-I but all the other power stations in K-Electric's own generation fleet as well. In the fuel component of power purchase cost, major reason of the claimed variation is the decrease in per unit cost of CPPA-G from Rs 5.261/KWh in the reference month of March to Rs 4.330 /kWh in June last.
Comments were received from Anwar Kamal Law Associates (AKL.A), Syed Adil Gilani from Whistle Blower Pakistan, and Tanveer Ahmed Barry, Chairman Sub-Committee Karachi Chamber of Commerce and Industry (KCCI) regarding hearing in the said matter. Anwar Kamal Law Associates (AKLA) submitted that K-Electric continued to draw electricity from NTDC/CPPA-G and underutilized its own power plants as well as external sources ie Gul Ahmed and Tapal. As a consequence of this act by the utility, NTDC/ CPPA-G had to purchase electricity from the costlier power plants of its system yet it did not charge K-Electric on the principle of Marginal Cost.
The commentator also submitted that K-Electric was being favored at the expense of the consumers of XWDISCO's. NEPRA through monthly and quarterly adjustment decisions has been repeatedly directing K-Electric to prudently utilize its available energy capacity so that load shedding could be reduced/eliminated in its territorial jurisdiction and in the whole country.
NEPRA also issued multiple explanations/show-cause notices to K-Electric on under-utilization of its energy sources and violations of power purchase agreement with NTDC, however, the same were challenged by K-Electric in the Sindh High Court. On events occurring in June 2015, K-Electric was issued a show cause notice for which one of the grounds was the ongoing underutilization of its available power facilities (both own and external sources) and was fined by the NEPRA vide decision dated March 25, 2016.
He also submitted that NEPRA had not approved/ notified the heat-rates of the K-Electric's power plants in the Gazette of Pakistan for the last over 6 years. Furthermore, even after conversion of K- Electric's power plants from open cycle to combined cycle, NEPRA had not revised their heat-rates which might not be in favor of the consumers.
The A KLA also submitted that K-Electric had been favored by making amendments to the original implementation agreement. It is informed that the implementation agreement and the amended implementation agreement were signed between K-Electric and Government of Pakistan and NEPRA had no role therein.
Tanweer Ahmad Barry also highlighted this issue by submitting that NEPRA should conduct the heat-rate test of the power plants of K-Electric by an international expert as K-Electric was operating its own generation power plants at very high heat-rates.
He submitted that the FCA petitions had to be entertained on a monthly basis on which the Authority had to issue decisions within seven days of next month and several requests based on the same hearing date was a violation of the law.
Tanveer also commented that own generation power plants of K-Electric having auxiliary consumptions of more than 6.1% merited for an energy audit and should be investigated.
The NEPRA decision said, "In view of the discussion in preceding paragraphs, the Authority has decided to pass on Ps.36/kWh to the consumers of K-Electric as FCA for the month of June 2016." It is to be noted that the aforementioned FCA was being allowed on the provisional basis and could be subjected to adjustments if it was found that K-Electric, while dispatching power from the generation sources of its system, had failed to utilize its power stations prudently. The worked out amount of FCA ie Ps.36/ kWh would be charged by K-Electric in the prospective billing of September, 2016.